Social Innovation: India Gives Cash Directly to the Poor

Monday, December 17, 2012

In January 2013, India will start the world’s biggest social innovation programme: giving cash directly to its poorest citizens in a bid to reduce its very large problem of corruption that stops subsidised goods and welfare benefits from reaching those who really need them. This initiative will affect at least 720 million people—a population almost the size of Europe!

The scheme is open to families who live below or just above the government-set poverty line. The Indian government expects to transfer up to 40,000 rupees ($720) a year to each poor household. Cash handouts will replace the money the government currently spends on subsidies on goods such as fuel, food and fertilizer. India plans to launch this ambitious social innovation program from 1 January, covering 18 states by April and the whole country by the end of 2013.

Several other countries have also introduced conditional cash transfers to the poor. One of the most successful cash transfer social innovation programs has been Brazil’s ’Bolsa Família’. It contributed significantly to the drop in poverty in Brazil during 2000. Other countries that have implemented similar schemes include the Philippines, Turkey, Chile, Mexico, Indonesia and South Africa. Some development economists believe giving poor people cash rather than subsidized services cuts down corruption as there’s no opportunity for underhanded dealings.

Source: Just Means (link opens in a new window)